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The global mobile payment market size stood at USD 1.18 trillion in 2019 and is projected to reach USD 8.94 trillion by 2027, exhibiting a CAGR of 29.0% during the forecast period.
Mobile payment services offer the customers an instant money transfer and a secured substitute for the cash-based transaction. The increasing availability of high-speed mobile data networks along with increasing adoption of smartphones is boosting the adoption of payment solutions. The digitalization of payment services and growing e-commerce businesses are contributing to the growing market trends. The digital generation, i.e. generation Z, is likely to create vast opportunities for the payment industry. The key players of market are offering rewards, redeem points, loyalty points, and among others to attract the customer for paying through mobile is likely to drive the market.
Demand for Contactless Payments to Soar Amid COVID-19
The coronavirus COVID-19 has impacted the global economy and humans significantly. It has drastically changed the channels and modes of money transactions used by consumers and merchants. Today, the majority of the public are working from home and this is changing their shopping and payment habits. People are more cautious while shopping in public places. This has caused a sudden spike in demand for contactless payment methods such as mobile wallet and a competitive environment for merchants and payment processing systems. In March 2020, the World Health Organization (WHO) recommended the consumers across the globe to adopt contactless payment mode. This is likely to raise the payment transaction using mobile devices and boost the contactless payments such as QR code, tap to pay by near field payment (NFC), and carrier billing payment, among others.
According to MasterCard Incorporated, a study on payment shifts owing to COVID-19, maximum users are adopting contactless payment modes during this pandemic situation. According to MasterCard's survey, 79 percent of consumers globally are using contactless payment to maintain safety and cleanliness. These consumers are likely to continue with the payment mode post pandemic.
Although, the lockdown imposed by the government has caused slowdown in demand and supply chain and temporary shut-down of manufacturing and production units. This has resulted in reduction of the transaction volume and cross-border payments. However, the adoption of mobile transaction mode is rising significantly. Therefore, the payment mode is expected to gain rapid growth during and post the pandemic.
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Rising Number of Ecommerce Startups to Boost the Adoption of the Technology
E-commerce startups are witnessing significant growth in the market. According to the HexGn report of 2018, the investment of around USD 72.6 billion has been raised for commercial startups across 72 countries. The e-commerce startups are highly adopting the online payment solution owing to the instant and secured payment. Also, point-of-sale system requires less setup cost and investment, which is an affordable platform for startups and new players. Thus, the startups and new companies are focusing on adopting a payment mode, which is easily available for the customers.
To cater to the rising number of e-commerce businesses, major financial organizations such as SoftBank Group, IDGVC Group, Accel Partners, and others, are investing in startups. These financial organizations are investing heavily in the technology as a result of increasing demand from the customers. For this, banks are entering strategic partnerships with non-banking firms such as the retailers, e-commerce, and startups. Therefore, the rising trend of e-commerce startups is likely to boost the demand for the market.
Integration of Artificial Intelligence with Payment Technology to Boost Market Growth
Online payment creates tremendous data sets with each transaction that can be applied to gain customer insights. This data consists of information such as channels adopted by the user, their purchasing trends, buying behavior, rewards applied & redeemed, among others. By integrating artificial intelligence technology with mobile payment solutions, retailers will be able to provide services as per the requirement of the customer. In addition to this, artificial intelligence helps businesses to process the data and recognize the patterns, which can be helpful to identify the buying behavior of the consumers.
The future trends such as the purchasing preferences of the users can be tracked using artificial intelligence technology. This enables businesses to plan future campaign strategies and business plans for gaining efficiency. Besides, with AI, daily interaction can be achieved via chatbots to prepare and execute the transaction process as requested by the user. AI can efficiently handle the automatic payment process and number verification. For instance, Starbuck’s, My Starbucks Barista app, allows mobile ordering and payment for its customer. Through this app one can select the preferred order and location for its takeaway. When the customer’s location is near the store the designated amount is deducted instantly from the users account with the help of AI technology.
The other application of AI integration is at banks and financial institutes to detect fraudulent activities in mobile payment technology. A large amount of data is being generated at the banks and merchant centers during the transaction. Every online payment requires continuous scanning to prevent fraud, and hence, the financial companies are adopting AI for scanning and preventing cyber-attacks. As AI can detect patterns, it can be very useful in detecting fraudulent activities in real-time during this type of payment process.
Therefore, increasing integration and implementation of artificial intelligence for better customer experience and secured mobile transactions is likely to drive the market.
Pay-backs and Reward Strategies to Boost the Market
The payment service is gaining traction with the increasing adoption of smartphones and advancing internet facility. Presently, several service providers are investing into the business, thereby creating a fierce competition in the consumer market. To maintain a loyal customer base and create new customers, the payment apps companies such as Google Pay, Alipay, Amazon Pay, and others are using new strategies. For instance, Google Pay offers scratch cards containing a certain amount that can be achieved over minimal transactions. Such initiatives are helping in maintaining customer loyalty with the users paying through smartphones. Furthermore, companies have started to offer rewards and cashback when the customer opts for mobile channels for transactions. With the implementation of such reward facilities, the customer tends to use mobile apps for paying every transaction. This will boost the adoption of the payment services in the coming years.
The mobile payment providers are offering an app to maintain a track of points for the users. For instance, Samsung Pay offers reward points to its smartphone users for every purchase they make. The Samsung reward points can be used to purchase their products., Through a mobile app, the users can access, track, redeem points, receive location-based offers, make mobile payments, and provide added convenience and utility. Similarly, retailers are offering different types of loyalty points. On achieving certain points, a user can redeem them against free or discounted food or drinks. Many customer-oriented industries such as travel & tourism, restaurants, and hospitality sectors, have started adopting the payment apps. For instance, Hilton Worldwide started room booking and payments through their own app, Honors, to enhance their customer engagement
Security Concerns and Convenience of using Cash is likely to impact the Adoption
Although contactless payment solution provides several features such as better operability, reliability, and flexibility, a majority of the end-users are still comprehensively dependent on cash for their daily activities. People have been using the traditional payment mode for several years, and thereby, they are reluctant in adopting new technologies. The customers owing to their habits feel safe in the traditional mode of payment when the transaction amount is huge.
Also, the payment mode stores the personal information such as location, amount balance, purchasing pattern, card PIN along with other insights. This increases the risk of unauthorized usage of this personal data and increases security concerns amongst the customers. This is likely to hamper the mobile payment market growth.
Proximity Payment Segment to Generate High Revenue Owing to Hassle-free Usage
As per payment type, the market is categorized into proximity payment and remote payment. The proximity payment segment is further sub-segmented into near field communication (NFC) and QR code payment. The remote payment, on the other hand, is further categorized into unstructured supplementary service data/SIM application toolkit (USSD/STK), direct operator billing, digital wallet, and others.
Proximity payment refers to the in-store payment solutions using smartphones. The proximity payment is exhibiting a rapid growth in the market owing to its instant payment offerings. Proximity payment is free from the card and cash transactions and offers instant payment by swiping, tapping, waving, or through other similar contactless processes. This is likely to boost the demand for proximity payment solutions. In the proximity payment segment, near field communication (NFC) is the leading payment method. Many telecommunication companies such as China Mobile, AT&T, Vodafone Group, Bharti Airtel and others are providing SIM-based NFC, which can be instantly operated at the point of sale (POS). Moreover, the required standard devices for NFC are widely implemented at POS and are gaining traction. This is increasing the demand for NFC payment solution.
The QR code segment is expected to gain maximum market revenue in proximity payment. The Quick Response (QR) code has gained instant popularity in the market with its launch owing to its ease of payment process. With the unique barcode technology, QR code can offer instant and secured transactions. This process is widely used for peer-to-peer transactions in the retail industry.
Earlier, the payment process was time-consuming. However, with the introduction of NFC and QR code, transactions are done easily and quickly. The easy usage and availability of standard devices are boosting the proximity payment segment in the market.
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BFSI to Exhibit Substantial Growth
The industries covered in the market are media & entertainment, retail, BFSI, automotive, medical & healthcare, transportation, consumer electronics, and others (education, IT & telecom, etc.).
The digitalization and technological innovation have highly impacted the BFSI industry. This technology is providing promising opportunities for the BFSI industry, as this platform enables instant transactions without following a long process. The platform providers are partnering with banks and other banking service providers to integrate this technology into their payment platform. This has led to the introduction of a mobile banking platform that allows users to do the payment for shopping, retail payments, electricity payments, and others. For instance, MasterCard Incorporated, in partnership with RBL Bank and Samsung India, launched Samsung pay for contactless mobile payment. The Samsung Pay application will allow the RBL bank consumers to operate the payment authentication through fingerprint, iris scan, or PIN.
Similarly, many banks and financial institutes are highly investing in mobile payment solutions. BFSI companies are developing smartphone apps, banking technology, and providing security, to support the rising demand. This is likely to boost customer engagement and retention. Additionally, by including services such as payment through smartphones, it will enable the banking industry to reach a large population of unbanked customers. This is likely to boost the adoption of this type of payment in the BFSI industry. For instance, some of the payment platform providers in the market such as Google pay, Paytm, BHIM, and PayPal allow users to do the transaction without adding money into the wallet and transfer the amount directly from their bank account. This is anticipated to drive the adoption of the technology in the BFSI industry and supplement the growth of the market in the coming years.
North America Mobile Payment Market Size, 2019 (USD Billion)
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Global market is classified across five regions namely North America, Europe, Asia Pacific, Middle East, and Africa, and Latin America.
According to the market report, Asia Pacific (APAC) is likely to hold the major mobile payment market share market during the forecast period. In this region, India is likely to witness rapid growth in these payment services followed by Japan. In India, the adoption of these payment services has exponentially increased after the government’s demonetization action. Also, the government initiatives such as digitalization are expected to further boost the market in India. China is expected to gain the maximum market revenue owing to the maximum population base with the highest adoption smartphones. Alipay.com Co. Ltd. is a major player in the market based in China. The emergence of new e-commerce channels, rising online shopping, and new payment solutions are expected to support the APAC growth during the forecast period.
North America and Europe together are anticipated to account for the second highest market share. The U.S. has well-developed payment methods and a significant number of key players have their headquarters in the country. The players are attracting consumers in the U.S. and Canada by adopting strategies such as payback, and reward systems, among others. Whereas, Europe offers various payment solutions using smartphones, wherein, maximum people own bank accounts and payment cards. The introduction of innovative payment solutions through smartphones is boosting the adoption of these payment services in the region. Germany is likely to gain the maximum market revenue with the presence of international mobile payment service providers. For instance, companies such as Telefonica and Vodafone launched NFC payment for the German.
The Middle East and Africa region is expected to grow significantly during the forecast period. Latin America is an emerging region in the global mobile payment market. Additionally, the existence of financial services, along with the good penetration of mobile phones and the internet are the driving factors for the market growth in the region during the forecast period. The MEA region has less adoption of credit cards, which provides a huge scope of growth for the market. Moreover, the region is exhibiting an increasing adoption of smartphones. In Africa, Bharti Airtel has collaborated with Standard Chartered Bank and MasterCard for providing mobile wallets. This is likely to boost the market.
The Company is Focusing on Augmenting Payment Solutions
American Express Co is aiming to expand its payment services by offering easy to pay and secured solutions via mobiles. The company has implemented innovative strategies and is offering value-added services to enhance the customer payment experience. For instance, to enhance the out of country travel and expenses management, the company is providing non-card B2B payment solutions to its members. On the global front, it is highly focusing on providing commercial payment solutions to small and mid-sized organizations. For the expansion of its payment business, the company is entering into strategic partnerships with banks, network operators, card providers, and other payment solution providers. This is likely to provide a vast customer base to the company and will boost to expand its business across the globe.
September 2019 – American Express Co., launched Amex pay by bank facility for the UK cardholders. The company is partnering with the e-commerce merchants to offer its mobile payment solutions. In addition to this, it is utilizing the open banking policy of the UK to offer quick and secured contactless payment. Earlier, the company had launched its payment solution Amex Pay in India. The company offers QR code or mobile-based payment services in the country.
April 2018 – American Express in partnership with PayPal Holdings, Inc., to offer mobile payment solution for their customers. The collaboration will allow the companies to offer new and advanced features in this technology. The users will be able to pay Amex payment via PayPal and vice versa.
The market report highlights leading regions across the world to offer a better understanding of the user. Furthermore, the report provides insights into the latest mobile payment industry trends and analyzes technologies that are being deployed at a rapid pace at the global level. The report examines various paradigm shifts associated with the transformation of software. It further highlights some of the growth-stimulating factors and restraints, helping the reader to gain in-depth knowledge about the market.
An Infographic Representation of Mobile Payment Market
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Value (USD trillion)
By Payment Type
Fortune Business Insights says that the mobile payment market is projected to reach USD 8.94 trillion by 2027 in terms of transaction value.
In 2019, the market was valued at USD 1.18 trillion in terms of transaction value.
The market is projected to grow at a CAGR of 29.0% in the forecast period (2020-2027).
The proximity payment segment is expected to be the leading segment in forecast period.
The integration of artificial intelligence for better customer experience and secured mobile transactions is the key factor driving the market growth.
MasterCard, Visa Inc., Alipay.com Co. Ltd, Amazon Inc., PayPal Inc., and Google Inc. are the top players in the market.
North America region is expected to hold the highest market share.
Industries such as retail, BFSI, and media & entertainment are expected to adopt the solutions.
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